China exporters are now left in a crisis as the coronavirus hits its trading partners worldwide leading to cancelled shipments, returned goods and a dearth of new orders – accelerating a long-standing push towards domestic consumption.
The world’s second-largest economy is stirring back to life after virus cases dwindled from a peak in February, when activity came to a near-halt. But as China’s economy started to recover, lockdowns and restrictions in other countries has forced exporters to focus on domestic markets.
Chinese online marketplace Taobao said the number of foreign trading companies opening stores on its domestic-focused platform spiked 160 percent from February to May.
And policymakers – who have sought for years to wean the country off cheap exports and government spending in favour of domestic consumption – are welcoming the change.
“When there is no light in the west, there is light in the east,” commerce minister, Zhong Shan, said.
He said domestic sales from export businesses rose 17 per cent in April, and the government was supporting trading enterprises that specialized in foreign sales to tap the home market instead.
Foreign sales used to make up nearly half of toymaker Shantou Beilisi’s turnover, but this plummeted to just five per cent after the virus struck.
General manager Chen Zhuoyue said that orders from his largest export markets, the United States and Europe, are now “basically negligible”.
“Many countries there imposed lockdowns and the global flow of logistics is another issue … these have affected our order volume,” he said.
“There is also a rising number of unemployed overseas, and their purchasing power has fallen.”
Faced with few new orders and cancellations of existing ones, Chen said the company is attempting more domestic sales by changing the packaging of products and working with platforms such as JD.com to sell online.
Still, gearing towards the China market may not yield immediate results as weak domestic demand was a key factor behind the country’s poorest economic growth in around 30 years in 2019.